Conclusion, Investment Implications, Strategy

Consumer Staples Sector constituent Altria Group (MO) is currently amid favorable conditions for both outright strength and relative outperformance versus the S&P 500.  A sustained rise above the $51.41 area would target an additional 13% rise to $60.00.  This is an Asbury Momentum trade idea.

Analysis and Rationale

Altria Group, Inc. (MO), through its subsidiaries, manufactures and sells smokeable and oral tobacco products in the United States. The company provides cigarettes primarily under the Marlboro brand; cigars and pipe tobacco principally under the Black & Mild brand; and moist smokeless tobacco products under the Copenhagen, Skoal, Red Seal, and Husky brands, as well as provides on! oral nicotine pouches. It sells its tobacco products primarily to wholesalers, including distributors; and large retail organizations, such as chain stores. Altria Group, Inc. was founded in 1822 and is headquartered in Richmond, Virginia.

The upper panel of Chart 1 below plots MO daily since October 2021 along with its 200- and 50-day moving average, widely-watched major and minor trend proxies.  The lower panel plots the daily relative performance of MO versus the SPDR S&P 500 ETF (SPY) along with its 63-day (quarterly) moving average, the latter which we use to identify the Strategic trend of relative performance.

Chart 1

The green highlights show that MO is currently rebounding from a Mar 29th test of support at its 50-day MA (upper panel) while the relative performance line between MO and SPY is rebounding from a coincident test of its 63-day MA (lower panel), which defines its 2022 trend of Strategic relative outperformance versus the broad market.  Combined, these metrics indicate a low risk/potentially high reward opportunity to buy MO. 

Risk/Reward

Table 1 below shows that, considering a $60.00 upside target and a protective stop placed below the $51.19 area, a long entry price of $53.13 would provide a 1:3.5 risk/reward ratio (risking $1.00 to make $3.50) with an initial risk of 3.7%.

Table 1

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Please consult the table showing our Asbury 6 key market metrics to help determine if this investment is suitable for you.